Observations and Sample of Recent Trades: AMU, BTE:CA, CPB, SPGYF

Economy: 

The BLS reported that the economy added 157K jobs in June, significantly below the consensus estimate of 195K. Hourly pay rose 7 cents per hour and is up 2.7% Y-O-Y.  U.S. gains 157,000 jobs in July as unemployment falls to 3.9% - MarketWatch ("Wages usually rise 3% to 4% a year when the labor market is as tight as it is now."). The job gains for the prior two months were revised up by 59K. Employment Situation Summary The U-6 number ticked down to 7.5% from 7.8%. Table A-15. Alternative measures of labor underutilization

ADP reported that the economy added 219K private sector jobs last month. ADP National Employment Report | July 2018

U.S. companies create 219,000 new jobs in July, ADP says - MarketWatch

Personal Income and Outlays-June 2018

Fed holds interest rates steady, signals another hike coming soon - MarketWatch

Trump administration adds to China trade pressure with higher tariff plan | Reuters (the discussion now is to impose a 25% tariff on $200B of China's exports rather than 10%. China replied that it will hit back in response to this "blackmail" including imposing the same tariff on U.S. exports)

China urges U.S. to 'calm down' in trade dispute, says its tactics will not work | Reuters

China says it must retaliate to 'defend nation's dignity'

China announced on Friday its tariff list on $60B in U.S. exports that will be applied when Donald imposes tariffs on the $200B. 

The number discrepancy is due to China exporting more to the U.S. than the U.S. exports to China. Prior tariffs were on a $1 per $1 basis. China can also retaliate in a variety of ways other than through tariffs. Those measures include slowing down or eliminating purchases of U.S. treasuries which will drive up U.S. interest rates, allowing the Yuan to lose value against the USD which lowers the price to U.S. importers of Chinese products, and hostile acts internally for American companies including but not limited to increase inspections and legal proceedings in a rigged judicial system. 

China plans tariffs on $60 billion of US products

Kudlow Says Trump Won't Back Off as China Expands Trade War - Bloomberg

There is no indication that the Stock Jocks have any concerns about a trade war causing material adverse impacts to the U.S. economy or to U.S. corporate profits.  

Donald assured everyone that everything is going great with China and that nation will bend a knee in homage to him soon. 

Does Don the Demagogue have any proof that China is spending any money, let along a fortune, on U.S. ads trying to convince politicians to fight Donald on the tariffs? No there is no evidence but Lying Don needs no factual foundation whatsoever before spinning and spewing one of his reality creations. India to impose delayed tariffs on some U.S. goods in September

Only "fools" do not see the vast benefits that Donald's tariffs have already brought and will soon deliver to us all: 

And tariffs "will pay us vast sums of money" according to Donald.  

Donald is lying when he says that China will pay the U.S. tariffs. American importers of China's products pay the tariff. What the tariffs will do, and Donald will never say it since it would be a true statement, is increase the cost of goods for American consumers.  

The U.S. tariffs on imported products are in effect a tax on American consumers and will provide an umbrella for domestic manufacturers to increase prices to U.S. consumers. 

American manufacturers and farmers will also lose out on foreign sales due to countries retaliating against the U.S. imposition of tariffs. U.S. jobs are lost. Only a lying demagogue would claim otherwise. 

The Stock Jocks agree with Donald that the U.S. is winning the trade war and that other nations will bend to the Duck's will. Perhaps Canada and Mexico will, provided Donald backs off on some demands, and that result would be a feather in Donald's cap politically even though the effect on the U.S. economy would likely be mixed. China does not appear likely to take a knee IMO.  

++++++

Markets and Market Commentary: 

Market moves suggest China could blink first in trade war: Strategists (that is probably the consensus opinion at the moment and is reflected in the market shrugging off the acceleration of the tariff war with China as unimportant).  

BAML says investors should sell, if the stock market can’t meet these key conditions - MarketWatch

Trump hasn’t learned that it’s nearly impossible to win a trade war - MarketWatch

Trump’s trade policies have ‘upended’ the ‘global economic order,’ Bank of America writes - MarketWatch

Why stock-market traders are still in ‘wait-and-see’ mode on trade-war threat - MarketWatch

+++++++

Trump:

The Washington Post has now documented 4,229 false claims made by Donald since his inauguration through July 31, 2018. That by the way is an average of 7.6 false claims per day. That has to be a record. 

Tracking over 4,000 false or misleading claims made by President Trump - Washington Post

It is problematic for the future of our democracy that tens of millions believe Trump and view the free press as the enemy of the people and perpetrators of Fake News, defined to mean whatever news that contradicts Donald's lies, frequently idiotic spin, reality creations and/or anything that he does not want to hear. 

Republican politicians grovel before Trump and will not stand up to him in any meaningful way no matter what he says or does with few exceptions (retired or about to retire). Their silence was deafening when Trump told Sessions that he should end the Russia investigation.  

Hours after White House warns of new election meddling, Trump again points to 'Russian hoax' (Trump told a cheering crowd of True Believers  "Russia's very unhappy that Trump won". Putin stated clearly in the Helsinki news conference on  that he supported Trump in the 2016 election. Putin Said in Helsinki He Wanted Trump to Win - The Atlantic) 

Sarah Sanders refuses to say press is not 'enemy of the people'

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Trump and the Koch Brothers: 

Trump recently received a mild criticism from David Koch over Donald mercantilist trade policies. The reaction from the Man Child was swift: Trump calls Koch brothers 'total joke,' 'overrated'

The Kochs and their "Americans for Prosperity" organization are refusing to support some republican candidates in the upcoming election. 

One notable GOP senate candidate who will not be receiving money is Kevin Cramer who is running against Heidi Heitkamp (D). Donald carried this state with 64.1% of the vote compared to 27.8% for Hillary. Koch network says it is withholding support for Heitkamp challenger for now - The Washington Post; North Dakota Election Results 2016: POLITICO Hillary carried only two counties by securing a combined 2,855 votes.  

Donald continued biting the hand that feeds the GOP in a tweet published last Thursday: 

Trump keeps up attacks against billionaire Charles Koch

Washington Republicans rattled by Koch shift from Trump

Rush Limbaugh, who praises Donald with boundless enthusiasm that knows no measure, is a great guy in TrumpWorld:

Rush and Donald are soul brothers. 

The easiest way to manipulate Donald, who is afflicted with a severe case of narcissistic personality disorder, is to praise him profusely and never even hint at a criticism.  

+++

Trump and Alex Jones: 

Trump praised Alex Jones saying that his "reputation is amazing" and Donald will "not let you down". A Guide To Donald Trump’s Relationship With Alex Jones; Donald Trump Praises Leading Conspiracy Theorist Alex Jones And His "Amazing" Reputation

Alex Jones Claims Donald Trump Requests and Receives InfoWars Transcripts

Alex Jones’s vile lunacy and the degradation of the GOP - The Washington Post

Alex is in some legal trouble. Alex Jones, Pursued Over Falsehoods, Faces a Legal Crossroads - The New York Times

He has claimed that the Sandy Hook massacre was staged with crisis actors and has hounded the grieving parents of the murdered children.

The parents of one of the murdered children has received death threats and online harassment from Jones' followers, one of whom was sentenced to prison. Sandy Hook Shooting: Lucy Richards Gets Prison for Threats | Time (Ms. Richards does have the look of a Trumpette)

As a result of that harassment, the parents of Noah Pozner have had to move seven times to escape harassment from those claiming that the Sandy Hook massacre was just an elaborate hoax. The parents of those murdered children are now suing Jones for defamation.

Jones filed a cross claim against Noah Pozner's parents for violating his First Amendment rights to state his opinion and is seeking over $100K from the aggrieved parents that he has harassed with baseless accusations.

The Sandy Hook hoax message propagated by Jones is not at all unusual for him. 

He also claimed that the Boston Marathon bombing was a "false flag" government operation. 

He also claimed that NASA has built a child slave colony on Mars to harvest blood and bone marrow. 

Jones has also stated that the democrats are preparing to launch a second civil war. Many will have to buy a weapon first to do so. Who knows about that NASA project on Mars, but it is even harder believe that the Democrats are about to start a civil war with the gun nuts since it is so difficult to even get them off their collective butts to vote.  

Who Is Alex Jones? His Top Five Conspiracy Theories Ahead of NBC’s Megyn Kelly Interview; 

#SecondCivilWar: how a wild conspiracy theory became a July 4th Twitter meme - Vox; 

Conspiracy Theorist Alex Jones Apologizes For Promoting Comet Ping Pong 'Pizzagate' Fabrication : The Two-Way : NPR

Last week, he broadcast an accusation that Robert Mueller was involved in a child sex ring. 

Jones was also one of the proponents of the Pizzagate conspiracy claims, claiming that Hillary ran a child sex ring out of pizza parlor.  

YouTube just removed several Jones' videos for violating its child endangerment and hate speech standards. One of the videos was titled "Prevent Liberalism" and showed a man choking a child and throwing him to the ground. 

I understand why Donald and the Trumpsters hold Jones in such high esteem. After all, Donald's path to the presidency gained a lot of steam by becoming the foremost promoter of the Obama birther conspiracy theory. 14 of Donald Trump's most outrageous 'birther' claims - CNN  

'QAnon': A deranged conspiracy cult leaps from the Internet to Trump's 'MAGA' tour - The Washington Post

Dozens of Trump supporters championed the ‘QAnon’ conspiracy at his Tampa rally. Here’s what you need to know. | Tampa Bay Times

++ 

More on Don the Demagogue:

Trump Calls on Sessions to ‘Stop the Rigged Witch Hunt Right Now’ That would be relevant to the intent requirement for an obstruction of justice claim against Don the Demagogue.

And how did republican politicians who are not retired or about to retire respond to that tweet? 

Trump continues to downplay his ties to his former campaign chairman Paul Manafort whose criminal trial for tax evasion and fraud started last Monday:

If Trump wanted to find out about Manafort's connection to Ukraine and Russia before he hired him, he could have done a google search. But, alas, Donald will never take responsibility for his own actions. 

Don the Con will blame others for his own conduct as he wraps himself in his thick armor of victimhood. It was the government's fault that Trump hired Manafort as his campaign manager. 

Donald asserted in a campaign rally held in Florida that people need an ID to buy groceries so why not an ID to vote. 'The United States was allowed to truly get ripped off': Trump tells raucous Florida crowd I suspect that Donald has not done any grocery shopping. 

Trump Bashes ‘Fake News’: ‘They Can Make Anything Bad’ - The New York Times  Trump spent most of his time at this rally bashing the "fake news" media and deriding the reporters covering the event as “fake, fake disgusting news.”. He was present to endorse the GOP's Senate candidate Lou Barletta who enthusiastically supports Donald. Barletta did not speak much, but did ask the raucous crowd of True Believers to “Help me help President Trump drain the swamp,” which is hilarious since Donald and his administration are the biggest swamp creatures since the Harding Administration. A Trump endorsement in a blue state election, or one that is purple, and a candidate's embrace of Don the Demagogue in those states, will be counter-productive, given Donald's polling with independents, the disgust that Donald generates in about 5-10% of republicans (particularly college educated RHINOs), and the fact that seeing a rally like the recent one in Pennsylvania serves to energize the democrats to vote in a mid-term election when many would probably not make the effort.    

+++

Virginia's 5th Congressional District Race:  

The GOP's candidate in Virginia's 5th congressional district, Denver Riggleman, claims to be one of the foremost authorities on Bigfoot. 

He has posted Bigfoot Erotica on Instagram; and he is reportedly working on a book called "Mating Habits of Bigfoot and Why Women Want Him." 'Bigfoot erotica'? Virginia congressional candidate accuses GOP opponent of being a fan; Bigfoot erotica and Denver Riggleman, explained - Vox 

Riggleman also published a book in 2006 titled "Bigfoot Exterminators, Inc: The Partially Cautionary True Tale of Monster Hunt 2006". I was disappointed that I could not find a copy on Amazon. 

The incumbent republican in that district announced his retirement in May 2018 because he was an alcoholic. Republican Rep. Tom Garrett says he's an alcoholic, won't seek re-election This congressional district leans republican. 

++++++

1. Small Cap Canadian E & P Companies:

I am not having much luck with my Canadian E & P lotto tickets. I am about U.S.$700 in the red currently.

I view the sector as undervalued, which is clearly a minority view based on their prices. It sort of feels like I am in a one person minority. 

Most of these stocks are nowhere close to where they were back in the 2014 summer when crude oil started a price collapse. My general impression is that the stocks do not reflect the recovery in crude oil over the past year or the possibility of supply shocks. I currently have small positions in Baytex, Birchcliff Energy, Raging River Exploration, Surge Energy, and Whitecap Resources. The position in Surge is near break-even while the others are in the red. 

A. Bought 100 BTE:CA at C$4.32: 

Quote in CADs: Baytex Energy Corp. (Canada: Toronto)

BTE crashed and burned in 2014: Baytex Energy Corp. Interactive Charts (over $C48 per share in August 2014, closing that year at less than C$20)

Quote in USDs (NYSE):  Baytex Energy Corp. (BTE)

The problem was a combination of debt and the decline in energy prices which proved to be a dangerous mix for a number of E & P companies. The most recent decline was occasioned by its merger agreement with Raging River.

This stock does not pay a dividend which was eliminated in 2015. 

Baytex tanked after announcing an acquisition of Raging River Exploration Inc. (RRX:CA)

Baytex Tumbles as $1.2 Billion Raging River Deal Dilutes Stock - Bloomberg

Baytex will exchange 1.36 of its shares for each Raging River share. The transaction is expected to close on 8/22/18. 

Baytex and Raging River to Merge and Create a Top-Tier North American Oil Producer with Exceptional Assets and a Strong Balance Sheet 

I currently own 150 Raging River shares. 

I have already voted against the merger, preferring to see Raging River continue as an independent company rather than merge into Baytex based on the acquisition offer. 

Since the merger will likely occur, I will receive 204 BTE:CA shares in exchange for my Raging River shares, bringing my total BTE:CA position up to 304 shares. In effect, I am averaging down on my RRX position.

About Baytex: Baytex Energy Corp. - Home
Baytex Energy Corp. - Overview

About Raging River: Raging River Exploration Inc.

Last Baytex Earnings Report Before Purchase:

Baytex Reports Q1 2018 Results With Continued Strong Eagle Ford Performance

Second Quarter Earnings Report Released After Purchase:

Baytex Reports Q2 2018 Results

CEO Edward LaFehr on Q2 2018 Results - Earnings Call Transcript | Seeking Alpha

Last Raging River Report: Raging River Exploration Inc. Announces First Quarter Operating and Financial Results and Reaffirms Credit Facilities

B. Added 50 SPGYF at US$6.73-Used Commission Free Trade:

I now own 150 shares. This was an average down from my prior purchase of 100 shares. Item # 5.A. (4/20/17 Post)

CAD Price Quote: Whitecap Resources (Canada: Toronto)
USD Price Quote: Whitecap Resources Inc. (SPGYF)

Core Operating Areas - Whitecap Resources Inc.

WCP_Announces_YE_2017_Results_and_2017_Reserves_Evaluation. pdf

July 2018 Investor Presentation

SPGYF is the ordinary shares traded on the U.S. pink sheet exchange and priced in USDs. OTC Markets | SPGYF

On the day of my purchase, the CAD priced shares closed at C$8.72 and traded in a range between C$8.72 and C$8.95.

The SPGYF price will generally track the Canadian price converted into USDs. When I buy at Schwab, the conversion rate is performed by the broker. Since this one has light trading on the pink sheet exchange, I will use only limit orders. Consequently, the USD priced shares can gain or lose more than the ordinary shares priced in CADs due to movement in the exchange rate.

On the day of my purchase, there was a slight gain in the CAD/USD exchange rate to .76733.

If that rate moved up to .8 and the ordinary shares remained at C$8.72 (no change from the 7/30 close, then SPGYF would be priced at $6.98, up from the $6.72 close on 7/30.

At a 1 to 1 conversion rate, SPGYF would be priced at $8.72 with a close at C8.72 or a 29.8% gain with no change in the CAD price. You have to go back to 2011 and 2012 to find rates where 1 CAD buys more than 1 USD.  Over the past year, a rise above .8 has been a sell signal for me, where I convert CADs into USDs. My reported profit from those currency conversions last year was $1,917.

The unfortunate reverse side is that the CAD could continue to slide in value which, when coupled with a slide in the CAD priced ordinary shares, creates the infamous Double Whammy which is not a good thing.   

Dividend: Whitecap is currently paying a monthly dividend of $.027 per share.

Whitecap Resources Inc. Confirms Monthly Dividend For July Of $0.027 Per Share

Dividend Information - Whitecap Resources Inc.

Whitecap Resources Inc. Interactive Chart: Bear Trend Since August 2014

As with other small Canadian E & P companies, the Whitecap stock price has not recovered since crude oil peaked back in the 2014 summer. The stock was then trading mostly in the C$16 to C$18 range.

Last Earnings Report: Q/E 6/30/18 (released after this last purchase)

Whitecap Resources Inc. Announces Record Levels of Production, Increased 2018 Production Guidance and Second Quarter 2018 Results

2. Small Ball:

A. Sold 72+ AMU at $17.63:

This was a dividend harvest security where my goal was to escape with whatever profit was available after collecting several quarterly dividends.

Distributions:

AMU | ETRACS Alerian MLP Index ETN | UBS ETRACS

Quote ETRACS Alerian MLP Index ETN

MLP energy infrastructure stocks have been in a bear market since the 2014 summer.

ETRACS Alerian MLP Index ETN Interactive Chart (price was over $33 in August 2014)

Profit Snapshot: +$21.66

Last Substantive Discussion: Item # 2.A (12/11/2017 Post)

B. Sold 53+ AMU at $18.09 (round-trip $14 commission in this account):

A price pop last Thursday allowed me to dispose of AMU in another account profitably.

Profit Snapshot: +$15.93

Item # 4 Bought Back 50 AMU at $17.58 (7/5/17 Post) 

3. Sold 50+ CPB at $41-Used Commission Free Trade:

Quote: Campbell Soup Co.
CPB Analyst Estimates

Profit Snapshot: +$117.18

I harvested two quarterly dividends.

When I sold these shares, I viewed the probability as 1 in 3 that the Dorrance family will agree to an acquisition. The price could be anywhere between $50 to $55 per share in an all stock merger. If that does not happen, the CPB stock price could easily sink to the low-to-mid thirty dollar level.  Before the acquisition talk started to happen, I did buy a few shares at less than $35.

Subsequent to my sell, the shares popped slightly on 8/1/18 based on news that  a hedge fund has built up a $300M stake and CPB had hired a firm to help it evaluate strategic alternatives. Daniel Loeb’s Third Point has built $300 million stake in Campbell Soup - MarketWatch; Campbell Soup Rises on Reports Loeb Has Stake and Seeks Action - Bloomberg I view those stories to be old news. 

Closing CPB Price 8/1/18: CPB $41.43 +$0.53 +1.30% 

There was news on 8/3 which indicated that the Dorrance family was at least entertaining a possible buyout. Kraft Heinz Rises on Deal Speculation, Profit Beat - Bloomberg So I sold this 50+ shares too soon.  

Closing CPB Price 8/3/18:  CPB $42.76 +1.05 +2.52% 

I still view GIS to be a better acquisition candidate than CPB. 

Closing GIS Price 8/3/18: GIS $47.24 +$1.50 +3.28% (currently own 36+ shares in a "small ball buying program with the last lot bought at $41.12 on 5/3/18)

I had two CPB 10 share lot purchase that were sold for a loss (-$74.24). Those lots were bought on 2/21/18 at $45.63 and $43.8.

A 15 share lot bought at $33.26 produced the largest gain followed by five share lots bought at $33.52 and $34.65, all bought using commission free trades. Item # 1.D. Bought 15 CPB at $33.26 (6/7/18 Post)

When playing small ball, one option is to exit an entire position profitably just to get rid of some higher cost lots, wait at least 30 days, and possibly try again at lower prices. The cost basis for the 50.1718 shares was $38.67, so the first purchase would have to be below that number in a new chain.

I also have a small ball purchase chain in the Fidelity account that started with a five share purchase and I still own that lot. Maybe I could have been more aggressive. This is embarrassing:  

Item # 1.E. (6/4/18 Post)

I have nothing to add to my last substantive discussion: Item # 1.C. Bought 5 CPB at $34.65 and 5 at $33.52 (5/28/18 Post)

Item # 3 Sold 50+ CPB at $49.73+(11/20/17 Post)

4. Short Term Bond/CD Ladder Basket Strategy:

A. Bought 1 Bank of New York 2.2% SU Bond Maturing on 5/15/19:

Finra Page: Bond Detail (prospectus not linked)

Prospectus: PRICING SUPPLEMENT 

Issuer: Bank of New York Mellon Corp. (BK) 
BK Analyst Estimates 
Earnings Report for the Q/E 6/30/18
BK SEC Filings

Credit Ratings:

Bought at a Total Cost of 99.793
YTM at TC Then at 2.464%
Current Yield at TC = 2.2046%

B. Bought 1 Citigroup 2.45% SU Bond Maturing on 1/10/20:

FINRA PAGE: Bond Detail (prospectus linked)

I now own 3 bonds with two of those in a Roth IRA. This last bond was bought in a taxable account.

Issuer Citigroup Inc. (C)
C Analyst Estimates
Citigroup Reports Second Quarter 2018 Financial Results

Credit Ratings:

Bought at a Total Cost of 99.184
YTM at TC Then at 3.032%
Current Yield at TC = 2.4702%

Sample of CD rates maturing in February 2020 as of 7/27/18:

There were no CDs being offered at that time maturing in January 2020 which was when the Citigroup bond matures.

C. Bought 1 Wells Fargo 2.15% SU Bonds Maturing on 1/30/20:

I now own 3 bonds.

Finra Page: Bond Detail (prospectus linked)

Issuer: Wells Fargo & Co.
WFC Analyst Estimates

Credit Ratings:

Bought at a Total Cost of 98.814
YTM at TC Then at 2.966%
Current Yield at TC = 2.1758%

5. Intermediate Term Bond/CD Ladder Basket Strategy:

A. Sold 2 Welltower 4.25% SU Bonds Maturing on 4/1/26:

Fidelity uses a third party to price bonds rather than using actual trades. When I sold this bond, Fidelity had assigned a 99 price to the bond, yet there was a bid willing to accept 99.321 which was not the best bid then existing. I had to accept slightly less in price to move a two bond lot. This kind of price discrepancy between the value assigned by Fidelity and the true value of the bond is the norm. The value assigned by Fidelity is invariably lower than the market price. 

Profit Snapshot: +$9.6

Item # 2.B. Bought 2 Welltower 4.25% SU Bonds at a TC of 98.741 (5/28/18 Post)

Bond Detail

I still own 2 Welltower 4% SU bonds maturing on 6/1/25: Bond Detail

I have been tinkering some with my weighted average bond duration. I am lowering the total portfolio duration slightly by selling some longer term bonds and buying short term maturities in their place.

I may buy the 2026 Welltower bond back at below 98.

I will do some light bond trading. The following snapshot has all of my 2017 round-trip bond trades in this account which includes some issuer redemptions at maturity or early optional redemptions:

Just a lot of small ball. In several cases, I bought bonds back at lower prices than the previous purchase when interest rates reversed their downtrend and started to move back up starting last September. 

With these $1K par value bonds, all of which are bought in the bond market, I receive interest for the entire period of ownership, paid by either the issuer and/or the buyer of the bonds sold.

Cash Flow Received in Fidelity Account on 8/1:

This was a light first day of the month. I did receive two common stock dividends which were used to buy additional shares in AT & T (T) and General Mills (GIS), two odd lot positions in this account being bought under the "small ball buying program". 

No municipal bond interest was paid in this account. All of my Tennessee municipal bonds pay semi-annual interest on the 1st business day.

Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.